Park Hotels & Resorts (Park) on Tuesday said it has agreed to sell Le Meridien San Francisco and Hotel Adagio, Autograph Collection (San Francisco, CA) for $303.5 million, or approximately $572,000 per key.
”When adjusted for Park’s anticipated capital expenditures (capex), the blended sale price represents a 6.1% capitalization rate on 2019 net operating income (6.7% excluding capex), or 14.4x 2019 EBITDA (13.2x excluding capex),” said Park in a statement.
Management currently expects each of the transactions to close within the next 60 days.
The company is selling the 360-room Le Meridien San Francisco for $221.5 million, or approximately $615,000/key and the 171-room Hotel Adagio, Autograph Collection for $82 million, or approximately $480,000/key.
Net proceeds from the sales will be used to partially repay debt currently outstanding on its one remaining bank term loan. Pro forma for the repayments, the company expects to have approximately $80 million of corporate bank debt outstanding.
“I am incredibly pleased with our two upcoming dispositions in San Francisco, which are under contract at very attractive pricing, demonstrating the strong demand by institutional investors seeking high-quality hotels in urban markets,” commented Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer of Park.
“The upcoming sales of these two assets highlight our unwavering commitment to reducing leverage and prudently allocating capital. Once these two dispositions are completed, we will have exceeded our stated goal of selling $300 million to $400 million of hotels in 2021, with our year-to-date disposition efforts totaling approximately $477 million of gross proceeds. Operationally, we continue to witness strong demand trends across many of our core markets, while average RevPAR during the month of June exceeded 2019 levels at nearly 20% of our hotels within our consolidated hotel portfolio. Our portfolio’s performance over the past two months, along with sequential improvement expected to continue into July, has accelerated our expectations to break-even at the corporate level,” he added.